City Corp. has a $35 million dollar, multifaceted sewer project expected to be completed by March 2022 to fund.

Where will the money come from?

Russellville’s water utility is divided into two sub-categories or enterprise funds — water and wastewater (sewer). Revenue for the water division stems from rates, water usage, selling water to other cities and permit fees. Revenue for the wastewater division comes from customer rates, dumping and new connections.

In 2011, City Corp. sold 698.8 million gallons of water, amounting to $966,784.

Tri-County Regional Water Distribution District is the biggest customer, purchasing $877,000 of water and the remaining $90,637 in sales is divided between Dover, London, Atkins and the Russellville Improvement District.

“Our contract with City Corp. is tied directly to the water system side,” Tri-County Regional general manager John Choate said. “Our rate is based on the cost to produce water, and the wastewater construction projects shouldn’t affect the rates of our customers.”

Total revenue from water in 2011 for City Corp. was $5,754,331. After expenses, the net profit was $1.1 million for the fiscal year. Total revenue from waste water in 2011 for City Corp. was $3,917,390. After expenses, the net loss was $263,230 for the fiscal year.

City Corp. is a not-for-profit business, meaning all profit goes back into the company to fund capital improvements and for operation and maintenance. Funds are designated as restricted or unrestricted and have specific uses.

“We don’t issue dividends or pay stockholders,” City Corp. general manager Craig Noble said. “City Corp. is not in business to make money. We provide a needed service to the community. We set aside money each month in accounts for water and wastewater that can only be used for operation and maintenance. The account would show a positive balance, but the funds are restricted and cannot be used for new construction.”

Noble said co-mingling of the funds between the two enterprise funds are not allowed.

“We only have one bank account,” Noble said. “But there are specific accounting codes that designate what percentage of each category belongs to water and wastewater. We do not use income from the water side to pay for anything wastewater related.”

City Corp. has increased rates for both water and wastewater three times since 2008.

“Even with the rate increases, our water rates are lower now than they were in 1989,” Noble said.

City Corp. received a portion of the 1-cent sales tax from 1992 until 2002. Noble said revenue from that sales tax helped keep rates lower because of the additional source of income.

The 10-year, $35 million dollar project is divided into two phases — a construction project ending in 2016 regarding new EPA treatment standards and a line repair and replacement project ending in 2022.

Noble said the $9 million treatment project will be funded in-house with current revenue and the selling of bonds.

“The Russellville City Council approved a resolution to sell $9 million of bonds when the time comes,” Noble said. “We anticipate paying that back over 20 years with interest.”

Repair and replacement of 200 miles of sewer lines make up the bulk of the project, and the first $2.2 million of construction begins in September.

Noble said portions of the sewer system are 100 years old and some pipes in place are still clay. After the pipes are repaired and replaced, residents will notice a decrease in overflow coming from manholes during storms.

“People don’t really think about the sewer system until there is a problem,” Noble said. “It’s my job to ensure there are as few problems as possible and to comply with the standards of the federal government.”

The treatment construction and line project was mandated by Arkansas Department of Environmental Quality and the Consent Administrative Order (CAO) was agreed upon in 2009 and is enforced federally by the EPA.

Noble said EPA standards for wastewater treatment processing area constantly changing and compliance is mandatory.

“The EPA doesn’t care how big we are or how much money we have to pay for these updates,” Noble said. “All they care about is whether or not the work is done.”

According to the CAO, City Corp. has until 2016 to complete construction for the new treatment systems and pipe repair and replacement must be finished by March 2022.

Noble said City Corp. began investigating and improving in accordance to the CAO in 2010 and is on schedule to complete both projects on time.

“These are our deadlines and we must comply,” Noble said. “We can be fined up to $10,500 per day per violation each day we are not in compliance. It’s really not a question of do we want to do this? It is a matter of getting it done. We plan to begin with the East Second Street project in September, which is 20,000 linear feet of pipe. That will allows us to meet our deadline.”

Noble said City Corp. is financially sound to begin the $2.2 million project in September, but will continue to look for external sources of funding.

“Right now, we are OK,” Noble said. “When the time comes, if we need to sale additional bonds, we’ll pursue that. We hope that in the slow economy our construction bids will come in lower than the estimate and allow us to save money that way. Regardless of how we fund it, it has to begin.”

Noble said City Corp., in conjunction with the Russellville City Council, is still in the investigative phase searching for the most efficient way to fund the long-term improvement plan.

“This project is jointly moving forward,” Noble said. “We will need additional funding in the future. It’s just a matter of will it come from bonds, sales tax, rate increases or a combination. We don’t qualify for grants because Russellville is classified as a first class city.”

Noble said a rate increase would not be large and hopes to maintain customer and city support throughout this 10-year process.

“Nobody wants rate increases,” Noble said. “Our customers don’t and we don’t. We are looking at evaluating our existing rates every two years instead of waiting like we did last time. That would mean a two or three percent increase instead of 20 or 30 percent increase.”

Noble said City Corp. has also been looking at ways to make daily operations more efficient.